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Risk Management

Risk Management consists of the following processes. See also Knowledge Areas - Risk.

Process Project Phase
  Plan risk managment   Planning
  Identify risks   Planning
  Perform qualitative risk analysis   Planning  
  Perform quantitative risk analysis   Planning  
  Plan risk responses   Planning  
  Control risks   Monitoring & Controlling  
BetteDavis

"Fasten your seat belts. It's going to be a bumpy night."     Margo Channing (Bette Davis) in All About Eve

Risk management is the process of controlling risk. Risk management involves:

A risk is a potential event that may have a detrimental affect on time, cost, quality and deliverables.

An issue is a risk that has materialized. It is an unpredicted event that requires a decision; otherwise, a negative affect on the project may result.

Plan Risk Management

An important concept to remember is that the project manager's role is to prevent problems proactively, rather than reacting to them as they arise. Thus making risk management one of the most critical aspects of the project manager's function.

"Intellectuals solve problems, geniuses prevent them." Albert Einstein

Identify Risks

Risks are identified in all phases of the project. Even seemingly non-critical risks should be documented as Watch items and reviewed regularly as part of the monitoring and control process.

A common mistake that project manager's make when identifying and documenting risks is writing risk statements that are too generic. In other words, they could apply to any project, with any deliverables, at any time.

For more information on writing effective risk statements, refer to Risk Management.

Perform Qualitative Risk Analysis

During qualitative risk analysis, you determine which risks are important enough to manage. At this stage, financial values are not determined. Instead, risks are evaluated for severity and probability, and relative values (such as high, medium, low) are assigned.

Perform Quantitative Risk Analysis

During quantitative risk analysis, measurable, objective data is used to assign financial values to risks, probabilities of occurrence, and impacts. This process provides the project manager with the additional level of detail necessary to devise targeted risk responses which are appropriate and relevant.

Plan Risks Responses

Responses to risk threats include:

Not all risks are threats. Some represent opportunities. Strategies to respond to opportunities include exploit, enhance and share.

For more information on risk responses, refer to Risk Management.

Control Risks

The purpose of controlling risks is to:

Risk Triggers

Risk triggers are indicators that a risk event is about to occur.

Wouldn't it be great if we had the robot from Lost in Space who could warn us of pending danger to our projects?

LostInSpace

"Danger! Danger! Will Robinson."

Unfortunately, that is not life on project "planet earth."

Instead, savvy project managers will proactively identify risk triggers, which they will monitor throughout the project to alert them to signs that risks will manifest as realized issues.

Risk triggers are the warning signs alerting project managers that a risk is imminent.





Additional Information

    Visit the Risk Management Bookshelf to search for books available for purchase.

   Risk Management on Wikepedia

   Risk Management Sample Questions


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